Warren Buffet Goes All-in With BNSF Purchase

Mega-investor Warren Buffet used gambling terminology in describing his $34 billion purchase of Fort Worth-based railroad Burlington Northern Santa Fe: “Most important of all, however, it’s an all-in wager on the economic future of the United States,” said Mr. Buffett. “I love these bets.”

It certainly seems like heartening news when the country’s second-richest man is willing to continue playing his hand. But am I the only one who gets nervous when our entire economic system is likened to a poker game?

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Hal

But am I the only one who gets nervous when our entire economic system is likened to a poker game?

No, but that is a surprisingly naive view of capitalism. Don’t you work for DCEO?

No offense, but maybe it’s time to bone up on your business history as it relates to gambling. See Real Estate bubble, Dot Com speculation, Texas oilmen, Hunt Bros. and the silver market, Jay Gould, The Tulip bubble, and on and on and on.

Hal: Where are the good results in the business history lesson you provided? Maybe the oilmen, depending on how you’re defining that?

When the entire American economy is portrayed as one giant game for a few select players like Buffett to compete in — which, sure, maybe that’s what it is — it’s a little nerve-wracking, yes.

(And I realize that Buffett meant his statement as encouragement for all of us, his expression of faith in our collective future.)

Bill

Buffet’s poker gamble with BNSF is all about coal. As long as Smokey Joe Barton can keep the coal plants fired up south of Dallas, BNSF will able to charge a premium for the circuit trains it runs from Utah to Dallas. Half the tonnage BNSF moves is coal. TXU customers pay more for coal than anyone else!

Bill Marvel

Buffet’s money is perfectly safe. Major railroads are as safe a gamble as one can make in the markets. The renaissance of the railroad industry is one of the (mostly) untold business success stories. And — Bill — it isn’t just about coal.